MLB, Airlines and the Recession Depression
March 11, 2009 – 8:47 amIn the past week we’ve seen doomsday stories appearing in the press about airlines. As the OTR pointed out yesterday, the big question is whether or not the airlines can trim capacity to meet reduced demand. As the economy worsens, Major League Baseball is in a similar situation:
Major League Baseball has warned club businesspeople that attendance is expected to be down 17-20 percent in 2009, and that it could be worse, especially for franchises such as the San Diego Padres, Toronto Blue Jays, Detroit Tigers, Cleveland Indians, Houston Astros, Colorado Rockies and others that could be seriously impacted by the recession.
Revenue management techniques are increasingly utilized in baseball to maximize profits for premium games (i.e. when the Cubs play the White Sox) and increase volume for those less popular matches (Wednesday afternoon Pirates vs. Nationals games). Still, baseball owners can not remove seats from the stadium to match the supply with demand (nor would it really save them money.) They can close off sections to reduce the variable costs of having security, but that only goes so far. The real savings comes from reducing the cost of the product. Or, in baesball terms, trading high priced talent for a group of unproven young players. The real issue for this year, though, is how many teams are going to be buying? As the economy hits, it’s likely the big market teams will look for less expensive options to make a run for the playoffs than in the past.
